Canada Goose Shares Plummet as Analysts Downgrade Stock on China/U.S. Headwinds
Canada Goose Shares Slide After Downgrades
Canada Goose (TSX:) (NYSE:) shares took a nosedive on Thursday, dropping over 9% following downgrades from both TD Cowen and Wells Fargo.
Challenging Times Ahead for Canada Goose
In a note to investors, Wells Fargo analysts downgraded the clothing brand to Equal-Weight from Overweight, slashing the price target from CAD 25 to CAD 20 per share.
According to the analysts, Canada Goose is facing a tough macroeconomic environment in both the US and China. They also highlighted the anticipated unfavorable weather conditions during the holiday season as an additional pressure on the stock.
China Headwinds and Weak Seasonal Setup
The analysts expressed concerns about the “worsening China headwinds,” which could potentially result in a third consecutive weak holiday season for the company in the region. Additionally, they noted that the “unfavorable weather backdrop” is creating a weak seasonal setup in North America and Europe.
Furthermore, the analysts mentioned that they have observed a diminishing brand appeal through reduced social media mentions, indicating weakening brand heat.
Risks and Uncertainties Ahead
TD Cowen analysts also downgraded Canada Goose, shifting the rating to Market Perform from Outperform. They lowered the price target to $15 from $22 per share. TD Cowen identified several risks in the medium term.
The analysts expressed caution about the economic news in China and Europe and the lack of visibility regarding margin expansion if sales fall short of expectations. They are also monitoring factors such as non-parka product execution, the potential for increased digital engagement, warm fall weather, US credit card data, and weak customer trends across the sector.
It remains to be seen how Canada Goose will navigate these challenges and whether they can regain momentum in the market.